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Now, on the other hand, if someone else is paying for it, oftentimes it is a question of "Doctor, must I go home today, can't I stay a while longer until I am perfectly recovered?"

Mr. EUBANK. It is quite surprising about how people react. Now, my own mother was just the opposite when she was in the hospital. Other people that I know want to get home. They are afraid if they are in the hospital too long they are going to die.

I think you have two reactions in this respect. I believe that if you had free hospitalization there would be a tendency of a person to want to stay a bit longer and you might have a higher utilization rate.

We have another problem on utilization rate, too, Senator, that is just the reverse. There are a large number of proprietary hospitals coming into New York and we had to have legislation passed this year to have them get consent because we found out with proprietary hospitals coming in we had a lower utilization rate than some of the other hospitals, which caused a higher tax rate.

Senator LONG. One of the most expensive economies ever practiced in the Louisiana system at a time when the State was short on money was to eliminate what we called a free ambulance service.

We used to have an ambulance that would go get someone and bring them to the hospital, more often the ambulance was to take them home.

Now, when the State, as an economy measure, undertook to eliminate that ambulance service they found it cost the State a lot of money because you have some of these terminal cases, for example, where if a person is going to die, he is not going to die now, but a terminal case of cancer might hang on for 6 months to a year, and the State would need that hospital bed for somebody that they could cure. But you can't just put those people out on the streets, so for lack of an ambulance the relatives would refuse to come take them home. If you had an ambulance you could take them home and you could explain to them they have to take this person, perhaps their father or mother, and look after them because the State has done all it can do. That being the case, it was time that the relatives had their responsibilities of their father or uncle or whoever the person might be to take them in the home and provide care the best they could.

In other words, it is not just a job for the State. A lot of this is a burden on the individual people who provide medical care for their relatives.

Mr. EUBANK. For their own relatives, I agree with you. I might say there are two things you might be interested in.

One, New York has amended their Kerr-Mills program to pay for transportation to and from the hospital. They found out in doing that they could have care at the hospital and it would avoid them holding off and having high hospitalization.

Also Governor Rockefeller has appointed a committee under the chairmanship of Marion Folsom to study hospital costs in New York State. He has 10 areas of hospitals that he wants to have them look over. If you want a copy of the bulletin covering the Governors' committee, I would be glad to mail you one or several if the rest of the committee would want to read it.

Senator LONG. The point I have in mind is that I don't know whether these estimates take into account our own experience.

If we are going to provide this care at Government expense, you had better expect your costs to be about 50 percent greater than you are anticipating because that is our experience for what we provide in Louisiana, and we do provide a tremendous amount of medical care there.

Mr. EUBANK. I believe that is true and I think the doctors are going to have to work on that. I think they would be more inclined to work with you on the Kerr-Mills approach than under the King-Anderson approach.

Senator BENNETT. Mr. Chairman, that is a live quorum, I have no questions, I have no questions of Mr. Eubank. I think he has given us a lot of good information.

Senator CURTIS. I will be very brief.

Everyone who earns any money has to pay social security tax.

Mr. EUBANK. There are still some people, but generally speaking. Senator CURTIS. I mean the people who have to work with their

hands, do hard work.

Mr. EUBANK. Yes.

Senator CURTIS. And when they apply the social security tax you do not get any $600 exemption for yourself and the members of your family, isn't that correct?

Mr. EUBANK. That is correct.

Senator CURTIS. The poor people who make a few dollars have the social security tax taken out from the first dollar; isn't that correct? Mr. EUBANK. That is correct.

Senator CURTIS. The blind person, when he learns to do something and work with his hands, is taxed at these high social security rates from the first dollar, isn't that correct?

Mr. EUBANK. That is right.

Senator CURTIS. The physically handicapped man, who pulls himself up to a bench and, with great effort, makes a few dollars has to pay the social security tax on every dollar of it.

Mr. EUBANK. On every nickel; yes, sir.

Senator CURTIS. Yes, sir.

it

Now, can you find any altruistic reason why those people should be taxed to pay the hospital bill of somebody who is more able to pay than the person who is paying the social security tax?

Mr. EUBANK. No, sir. That is one of the reasons that I brought out in one of my meetings. I do not believe they should have to pay for the hospital bill of somebody else. We are already paying a lot of subsidization of people who are now retired on their own retirement benefits. I don't think there should be any subsidization in medical

care.

Senator CURTIS. I am not critical of any person who has a misunderstanding of King-Anderson. I am critical of the proponents who understand. If they told all the facts about it there won't be many people for it.

Senator LONG. Let me just say this, as one of those who supported and helped sponsor the Kerr-Mills proposal and as one who would like to amend this to make it a better program as we go along, and to provide more adequately for health care: I personally prefer a system of supporting medical care in which you have some regard for ability to pay such as our general revenues are incurred, as compared to what is the most regressive tax that anyone ever levied.

The social security tax, I would say, is as regressive as any tax that we have, is it not?

Mr. EUBANK. That is true. They would not get any deduction for it. I believe that the best criticism that has been made of the Kerr-Mills Act is that it pays more in matching formula than the OASI program does. This has resulted in some of the States having a better program for those that are not as needy than for the neediest. This is one of the things that I think should be corrected in the Kerr-Mills Act, because I think this criticism is constructive and it has worked in two States I know and has been one of the vetoes for Kerr-Mills, particularly in Indiana and Missouri.

They said they couldn't correlate the two with two programs and I think this is one of the things we have to correct.

Senator LONG. In States-in areas where the State has had available to it large amounts of money on a matching basis and those States have done nothing about it, would it not seem to you that those States ought to move to match what we have made available in order to provide more adequate care for their people before they come to us asking us to give them a whole new program?

Mr. EUBANK. Well, I think so, too. But there are some of the States that have poor programs, and being fair about the whole thing, and looking at some of the States, their own State budget is very high on education and health, and I think perhaps we ought to help them out a little bit more.

This is going to cost New York money in the long run for those States, but I think our board took a little courage in saying this. They need a little more money now in order to encourage them to have a little better Kerr-Mills program.

Senator LONG. Thank you very much.

The next witness is Mr. Paul D. Hill, International Association of Health Underwriters.

STATEMENT OF PAUL D. HILL, PAST PRESIDENT OF INDIANA STATE AND INDIANAPOLIS ASSOCIATIONS OF HEALTH UNDERWRITERS

Mr. HILL. Mr. Chairman and members of the committee, my name is Paul D. Hill, I am past president of both the Indiana State and the Indianapolis Associations of Health Underwriters. I come before this committee as a representative of the International Association of Health Underwriters, and on behalf of that organization, I wish to thank you, all of you for giving us the opportunity to present our testimony in opposition to compulsory health care for those 65 and over, paid for by social security taxation.

Our organization, the International Association of Health Underwriters, is made up of more than 5,000 members, in over 90 State and local associations all over the country.

It is our members, along with members of the National Association of Life Underwriters and the property-casualty insurance agents, who sell and service health insurance-who every day contact people about their health insurance needs.

Our members are constantly in touch with people in practically every State; our members are constantly in touch with people-our

members have the opportunity to "feel the pulse," as it were, of the American public. And so I would like to talk to you for just a few minutes about the way people around the country feel about this subject.

Before, I do, let's mention just a few statistics, since they are so vital to a subject of this kind. Other organizations will, we know, include others and I have tried to avoid those to avoid duplication.

Today, the total cost of welfare plans at the Federal level is $31 billion per year. In addition, the total cost of welfare plans at the State and local level is $12,700 million. We are already spending, as a nation, almost $45 billion per year on welfare plans. How much more can we afford?

Already, more than 5 million American families are paying more in social security taxes than they are paying in Federal income taxes. This is the point the Senator brought out just a moment ago. That figure was compiled before the latest income tax cuts, so today the figure is undoubtedly even larger.

Under the social security tax law now on the books, the tax rate is 3631⁄2 percent of the original tax rate. Under present law, the tax rate from 1968 on will be 4621/2 percent of the original tax rate. The actual tax paid, for those making $4,800 per year, is now 580 percent of the original maximum social security tax.

These amounts and rates are all based on present law, and do not take into account either the social security legislation of 1964 already passed by the House of Representatives, or any "medicare" benefits.

Under the social security bill passed by the House, after 1970 the tax rate would be 480 percent of the original rate. And the actual tax would be 864 percent of the original tax, for those making the maximum taxable in each instance. Again, the figures are without any provision for "medicare" benefits.

Senator BENNETT. May I stop you at that point, Mr. Hill?

Mr. HILL. Yes, sir.

Senator BENNETT. When you say 480 percent you mean they are just a little less than five times as high?

Mr. HILL. This is right; yes, sir.

Senator BENNETT. Wouldn't it be more clear to say that the figure of 3622 percent is more than 311⁄2 times as high?

Mr. HILL. Yes, sir; this is correct.

Senator BENNETT. And this goes on down?

Mr. HILL. Yes, sir.

Senator BENNETT. And the last figure would say that the actual tax paid would be more than 81⁄2 times as high as the original tax for social security?

Mr. HILL. Yes, sir.

This is under the bill that has been passed by the House.

Senator BENNETT. Thank you.

Mr. HILL. Many economists believe that 10 percent of payroll is about the largest social security tax that can realistically be levied. The latest social security revisions passed by the House call for an eventual tax of 9.6 percent-very close to that maximum figure again with no consideration given to taxing for the cost of "medicare" benefits.

According to the most recent census, in 1960, 70 percent of families over 65 owned their own homes, completely paid for. Half the

6,200,000 families over 65 at that time had incomes exceeding $3,000 per year. Where the head of the family worked that income was over $5,200.

"Medicare" benefits would involve much larger social security taxes-just how much larger, no one can say for sure. Insurance actuaries, basing their assumptions on billions of cases, say that costs for the "medicare benefits" that have been proposed would be twice what Health, Education, and Welfare experts say they would be.

Social security is supposed to be of greatest benefit to those in lower income brackets. Yet at the present time, 90.9 percent of all social insurance tax contributions are made by people with incomes of less than $10,000 per year.

How about cost projections? In 1949, the estimate was made that social security benefits would reach $12 billion per year in 1999. They reached that amount in 1961, 38 years ahead of schedule. Are projections about the cost of a "medicare" program likely to be much better?

The University of Michigan Survey Research Center completed a survey of the financial condition of older folks in 1962. It showed that people 65 and over are actually better off, financially, than any other age group in our Nation.

Some time ago I have not given you the exact year there, I am not sure whether it was 1961 or 1962-the Conference of Catholic Charities conducted a survey of the financial condition of older folks among what the conference itself described as "lower middle income" parishes, in St. Louis, Cleveland, and Buffalo.

When asked who would pay for hospitalization if it were necessary, over 80 percent of all those surveyed said they had hospitalization insurance, savings, or potential help from children or other relatives.

I have personally visited with a number of hospital administrators about this problem. And without exception, they report that the age group from which they have the most trouble collecting hospital bills is not older people-but young married people who are in debt for babies, houses, automobiles, TV sets, and so forth.

Now let's talk for just a moment about the thinking of people around the country. First, I would like to mention the surveys taken by your colleagues in the House of Representatives. We know you are already familiar with them, but anything that so closely reflects the thinking of the American people should certainly be included in these hearings.

In 52 polls taken among their constituents by Congressmen in 1961 and 1962, a majority of those replying were against King-Andersontype legislation in 33 instances; in only 19 instances out of 52 were they in favor.

Through July 30, 1964, single choice, "yes or no" polls taken by members of the 88th Congress totaled 51. In only 9 of the 51 did the largest percentage of those responding favor the social security approach.

In addition, seven "multiple choice" polls, attempting to discover what method people preferred for paying hospital bills for the needy aged, were taken.

In not one did a majority of those responding favor a social security approach. All of you on the Senate Finance Committee are, we recognize, already familiar with these figures.

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